Service and Operation management

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Service and Operation management

  1. 1. Service Operation Management Assignment Assignment of Service Operation Management with respect to Internal Evaluation Service Operation Management MBA (Pharmaceuticals) Semester- IV Submitted to: Prof. Nirav Joshi Prepared by: Milan Padariya Roll No: 63 Centre for Management Studies Ganpat UniversityPrepared by: Milan Padariya Page 1
  2. 2. Service Operation Management AssignmentQ. 1: Assume that you are a healthcare service provider, explain thevarious components of service package with respect to your healthcareservices.Ans: Healthcare sector is one of the important service sectors in world. WHO providessome basic service package in this sector which are as follow…Packages of essential (or basic) health services have been formulated in several healthsectors, for different reasons, not always explicit. The package inspired to the PHCconcept promoted by the Alma Ata Conference stressed social justice and empowerment.On the other hand, efficiency-oriented packages of low cost and modest ambition havebeen advocated by aid agencies of considerable clout. The concept retains considerableappeal, because of its promise of explicit, evidence-based, rational priority setting.The objective way the package formulation process is presented by its proponents raiseshopes of reaching uncontroversial conclusions. However, as Tarimo (1997) haspersuasively argued, the package concept is prone to misconstructions and abuses.Given the fragmentation prevailing in troubled health sectors, the perspective ofintroducing a standard package tempts many players, like in Afghanistan in 2003. Theformulation of a service package is one of the proposals commonly tabled at the start of arecovery process. Before embarking on it, decision-makers might take advantage of theexperience gained to date:  As other areas of health planning, formulating an essential service package is a value-laden exercise, even when wrapped in apparently objective cloths. Negotiation plays a central role in it.  The packages eventually chosen at the end of long and labour-intensive formulation processes are frequently unimaginative versions of the standard set of PHC services. Even components of arguable effectiveness, like ante-natal care, growth monitoring, TBAs and CHWs, tend to be maintained, instead of being suppressed, at least on paper.Prepared by: Milan Padariya Page 2
  3. 3. Service Operation Management Assignment  The formulation of basic packages may incur in high opportunity costs, particularly during transitions from war to peace, when many pressing priorities compete for the attention of decision-makers, and existing technical capacity is overstretched.  The choice of launching a package formulation exercise may represent a decision- postponing tactic, rather than a priority-setting effort. Additionally, the elaboration of a package may contribute to disguising (rather than clarifying) crippling levels of under-resourcing.  Packages may include all basic services seen as desirable by health professionals, without paying adequate attention to what might be affordable, given existing and foreseeable resource constraints. Packages without a cost attached are meaningless, whereas optimistically-costed ones are misleading. A rule of thumb worth considering is that health service packages tend to cost more to deliver in field conditions than reckoned at the drawing board. The roots of this recurrent underestimation of true costs are frequently traceable in political expedience, rather than in technical flaws.  Essential packages rarely if ever fully translate into service delivery realities. Patient pressure force health workers to pay attention to conditions not included in the package. Professional preferences expand the weight given to complex conditions and sophisticated treatments, regardless of their importance and effectiveness. And capacity constraints inadequately taken into account during the formulation of the package jeopardise its delivery.  Package formulation exercises fail often to consider the variety of settings that exist within a country, particularly a large one. The single package eventually chosen may be appropriate only to a sub-set of situations. Additionally, disease patterns may vary within a country to such an extent, that they impose the formulation of multiple packages, or the neglect of the standard one. In Southern Sudan, three service packages must be developed, for densely-populated areas, for sparsely-settled ones, and for nomadic groups. To these packages, a fourth onePrepared by: Milan Padariya Page 3
  4. 4. Service Operation Management Assignment devoted to returnees must be added. The cost of providing the same basic services in each of these different situations differs substantially. Alternatively, for the same financing level packages of remarkably different content have to be expected.  The package formulation exercise has rarely if ever the political clout to challenge established special programmers. The services provided by them are therefore included in the package, regardless of their objective worth. And the management arrangements of special programmes remain in most cases separated from those of standard services. Behind the supposedly integrated package of basic services, a patchwork of ill-assorted production lines, with nobody truly in control of delivering the full range of services, can be found.  The main challenge faced by health managers is not choosing the services to be delivered, but rather finding ways to materialize a predictable set of them within tough capacity and resource constraints. Problem-solving skills are likely to be more important than detailed blueprints for health service delivery at different levels of care. This becomes even more important in unstable environments, where health managers are not in full control of information, events and resources.  Most existing service packages fail to fully incorporate the vastly expanded financial and technical implications of handling AIDS patients in increasing number and at multiple sites. Even without providing HAART, upgrading basic health services to cope with the mounting toll of AIDS-related conditions implies massive investments in facilities, staff, equipment, drug supply and management systems, with associated soaring recurrent costs. Cheap PHC delivery in a country stricken by HIV/AIDS is now out of question. Instead of working out the implications of the epidemic for standard basic services and redesign them accordingly, the frequent response has been the introduction of special programmes, implemented by dedicated agencies and NGOs. The predictable results of this approach are high delivery costs and further damage to standard basic services starved of resources and capacity.Prepared by: Milan Padariya Page 4
  5. 5. Service Operation Management AssignmentAgainst the just-mentioned shortcomings, efforts to develop packages that stand truechances of thriving should focus on fostering an environment conducive to the deliveryof equitable, standardized essential services of acceptable quality. Favorable structuralconditions include good technical and management training for the eventual providers ofessential services, adequate resource levels, consistent allocative decisions, soundprofessional tools made available across services (information, relevant guidelines foraction, realistic targets, and functioning monitoring mechanisms).When most favorable conditions are not granted (which is usually the case), a heavyinvestment in formulating service packages may fail to return proportional gains. Interimpackages, developed quickly and at low cost, by taking advantage of expert opinion andof what is already done in the field, might turn out as a sensible alternative.Generally In case of standard service these all perspectives must be come first as youprovide service to others.Prepared by: Milan Padariya Page 5
  6. 6. Service Operation Management AssignmentQ. 2: How you will maintain the excessive arrival demand of thepatients in case of healthcare service? Explain the various strategies tomanage the capacity of your services.Ans: The entire patient journey can be measured and analysed from initial telephone call,through to arrival, consultation, prescribing, internal and external referral to anotherdepartment or service and closure.Following Perspective one should remember during providing service in health care:  Case management  Structured and coded recording of clinical consultations  Single and recurring appointment scheduling  Embedded clinical decision support software  National demographics database tracing  Extensive reporting capabilities  Access to Summary Care Record  Patient record management  Prescribing and medicines management  Electronic post event messaging  Interoperability with other care services  Case prioritization including indentifaction of life threatening emergencies  Access to view shared care records e.g. GP records via Healthcare Gateway MIG  Quality audit management: personal audit and reviewPrepared by: Milan Padariya Page 6
  7. 7. Service Operation Management AssignmentAs we talk about the global era. So many software are available for managing excessivearrival of patient.Let’s have brief introduction about Patient Management Software (PMS):Patient management software (PMS) is referred to as software that is regulated as amedical device. It is software that is used to acquire medical information from a medicaldevice to be used in the treatment or diagnosis of a patient. It can also be software that isan adjunct to a medical device and directly contributes to the treatment of the patient byperforming analysis, or providing treatment or diagnosis functionality that replaces thedecision and judgment of a physician.Application:Medical devices are classified and these classifications became somewhat less restrictivein December, 2010. Regulations provide rules for classifying medical devices into fourincreasing risk levels – Class I, Class II, Class III, and Class IV. Patient managementsoftware is classified as either Class I or Class II. Software that is intended to be used toview images, or other real time data, as an adjunct to the monitoring device itself, for thepurpose of aiding in treatment or diagnosis of a patient, would be Class I medicaldevices. Medical device software that is an adjunct to another medical device and isinvolved in data manipulation, data analysis, data editing, image generation,determination of measurements, identification of a region of interest in an image, oridentification (by an alarm or alert) of results from a monitor that are outside of anestablished range, is a Class II medical device if it: (1) provides the only means andopportunity to capture or acquire data from a medical device for aiding directly indiagnosis or treatment of a patient; or (2) replaces a diagnostic or treatment decisionmade by a physician.Examples of patient management software are PACS, remote patient monitoring. Othersinclude any medical device that is used to transmit data from a medical device or analyzedata from a medical device such as blood pressure monitors and glucose monitors.Now main headache is Capacity Management.Prepared by: Milan Padariya Page 7
  8. 8. Service Operation Management AssignmentGenerally capacity management in Healthcare is much difficult…Following you can find some strategies to manage the capacity.If you ask any hospital executive to talk about his or her top five priorities, he or she willlikely reply that reducing expenses and increasing efficiency is one of them.Interestingly, a large percentage of these executives consider effective capacitymanagement to be a lesser priority, when in fact it is one of the bigger levers that can bepulled to get cost out, while also having positive impact on physician relations, thepatient experience, and quality of care. And with an estimated 32 million new patientsentering the system under the Affordable Care Act, the organizations that get theiroperations in order now will be positioned not only to handle any undesirableconsequences, but also to capitalize on strategic growth, versus being a victim of whatcomes in the door.Recent survey data shows 54 percent of hospital executives report that existing patientflow feels congested and that they expect their organizations to grow over the next fiveyears. Yet, nearly the same percentage (48 percent) say they are comfortable with theircurrent number and mix of beds. One problem is that many organizations aren’t in thehabit of understanding the root causes of bottlenecks that occur in daily operations:surgical schedules blocked but not utilized; delays in appointment times that equate toloss in market share; and clinicians swamped one day and standing around the next.Understanding these questions are a logical first step in building a foundation to bothaccommodate and ultimately seek out the right kind of future growth.environment. You must constantly deal with issues such as clinician shortages, a rise inemergency department (ED) visits and complexity of care to provide effective andefficient care to patients.CareAware Capacity Management is a suite of solutions that delivers tools andknowledge to help health care providers improve efficiency and throughput across aPrepared by: Milan Padariya Page 8
  9. 9. Service Operation Management Assignmenthealth care organization. CareAware Capacity Management includes solutions designedfor tracking and patient flow. These solutions can be used separately to improve keyworkflows or together to transform overall flow and utilization.Key Benefits of Capacity Management Solutions:  Increase revenue by maximizing throughput and length of stay  Reduce costs through greater staff efficiency and better equipment use  Improve care by empowering providers with actionable data  Improve patient and provider satisfaction through reducing wait times Capacity management is the ability to balance demand from customers and the ability of the service delivery system to satisfy the demand . This places an emphasis on understanding first the nature of demand by forecasting (Lovelock, 1984) and second the options for managing capacity to meet the expected demand. Sasser (1976) has suggested two basic strategies for managing capacity in services of "Level" and "Chase", the former applicable where capacity is limited and hence the focus is on influencing demand to be in line with capacity, and the latter strategy being possible when supply can be changed to keep in line with demand. Capacity management in services to match supply and demand has a direct influence on the ability of the service delivery system to achieve service quality and resource productivity targets. Capacity management in service operations is a testing activity for operations managers because the nature of the service delivery process and the involvement of the customers in the process restricts the normal options open for controlling the process to match supply with demand; namely, altering the capacity, holding and inventory in anticipation of demand, and requiring customers to wait for the service.Prepared by: Milan Padariya Page 9
  10. 10. Service Operation Management AssignmentQ. 3: “CRM is playing an important role in service industry”. Explain itwith respect to any service organization.Ans: CRM stands for Customer Relationship Management. Customer Relation is veryessential for any Service Industry.If we talk about the Hospitality Industry CRM plays vital role. Which I can prove as perfollowing discussion.The luxury hotel industry today is in the globalization market and the use of customerrelationship management (CRM) has becomes an important strategy for attracting andbuilding customer’s brand loyalty. Nowadays, the high quality of hotel facilities andamenities are no longer considered as luxury and has become a primary component oflifestyle. In fact, the hotels can collect and incorporate their guests’ information and itmay be a chance for the luxury hotel to improve their profitability. Hotel may use theinformation about the customers to build their relationship and it will improve customers’satisfaction and loyalty, and increasing their profitability. For an example, the hotel canensure that customers will come back again while offers them with the special and uniqueserviceAs today, the best competitor advantage for the hotel industry is continuing providesexcellent quality service and coming out with the innovation idea. In the competition,most of the service provider will try to offer several choices, greater value and differentlevels of service to attract the customers. By using price discounting and providing thespecial benefit will develop customer loyalty and it also the most commonly strategicused by hotel managers in order to gain the competitive advantage. Thus, value of qualityservice provide also become the main key point to a hotel’s capability to discriminateitself from competitors and build up their unique customer loyalty .Getty and Thompson(1994) found that the quality of accommodation, fulfilment provide will totally effect onthe customers’ satisfaction and expectation. By using past personal experiencePrepared by: Milan Padariya Page 10
  11. 11. Service Operation Management Assignmentinformation to let the guests staying will help the hotel management to increases theirhotel revenue. As in the hotel industry, customer relationship management (CRM) ismore in performing and practice of collecting guest fulfilment data.By build special brand loyalty for customers who continue to spend time and money withthe hotel, customer relationship management (CRM) will help the hotel modify the stayof loyal and valued their customer. It is important because customers will memories andkeeps in mind the hotels that gave them the personalized care. Thus, by using thecustomer relationship management (CRM) to check and ensure hotels equipment meetwith the customers satisfaction. The hotel industry must watchfully consider the waysthey maintain the relationships and fulfil the need of their customer as the customer isimportant to their business .Most of the hotel organization will using the customerinformation data and customer knowledge to expect customer behaviour, needs andproblems.In the era of globalization there is an increase in competition and with this competitionthe methods of operating a business organization has changed drastically. Customers arethe reason for existence which has resulted in increasing Customer expectation in Globalscenario. Customer Satisfaction has converted into a critical issue which decides thesuccess of any organization. It is one of the major factors which have to be taken intoconsideration. It is the demand of market to find out a way to make and feel yourcustomer satisfy. The Concept of Customer Relationship Management (CRM) hasemerged as magic stick and it describes the way to reach “Customer delight ness”. CRMincludes basically understanding the customer’s need and requirement and the essence ofCRM is Customer Retention. The Application of CRM in Hospitality Industry is requiredto increase the satisfaction level of customer and resulting in maintaining long termrelations, helping the Social Recognition and developing Customer loyalty too. Bottomline is that “Positive Word of Mouth” brings lot of advantage along with it like reducingmarketing cost, increasing profitability, reducing Customer turnover, maintaining marketshare and a better Return on InvestmentPrepared by: Milan Padariya Page 11
  12. 12. Service Operation Management AssignmentCustomer relationship management (CRM) has transformed the hospitality industry allover the World. Although CRM is a recent marketing strategy used in hospitality industryto attract and retain more customers it has already gain wide popularity among itscustomers. It has been widely popular especially in developed countries like UnitedStates, United Kingdom and Australia. CRM helps owners, employees, Customersthrough providing services like marketing, sales, e-commerce, and customer service.From the above discussion we can say CRM plays important role in Service Industry.Prepared by: Milan Padariya Page 12
  13. 13. Service Operation Management AssignmentQ. 4: Explain the competitive generic strategy with respect to anyservice industry.Ans: Competitive Strategies are the most important in any service organization. But inSoftware industry it must be necessary because it is very volatile in nature. As softwareindustry comes under technological Industry and product life cycle is very short in thesoftware industry.Technology firms generally perform three important and inter-related activities: strategy,planning, and operations, each having a different intent and time horizon. The function ofstrategy, which has a time horizon of years, is, in general, to set the long-term direction orposition of the firm, for example define the technology, product, or service that the firmintends to develop, and determine the intended market for the product or service. Thefunction of planning, which, in general, has a time horizon of several months to years, isto translate long-term strategy into medium-term activities, e.g., the portfolio of projectsthat the firm should execute the time-phased planning of these projects, and resourceallocation. The function of operations, which has the time-horizon of days to months, is,in general, to translate medium-term planning activities into short-term product design,development, and delivery activities such as prototyping, manufacturing, product release,and shipment. In this chapter we address strategy.There are several different types of strategy, including competitive strategy, technologystrategy, product market strategy, financial strategy, and supply-chain strategy. For atechnology company to be successful all these strategies need to be aligned with eachother, and with the business goals of the firm. Competitive strategy, which is the focus ofthis chapter, is the highest level of strategy in the firm, and is intimately related to themission and vision of the firm and also to setting the direction for all the other strategiesin the firm.There are several schools of strategy formation: design, planning, positioning (Mintzberg,1998). In this chapter we focus on two important schools or frameworks for strategy-creation or “strategy-making” that are particularly important for high-technologycompanies. The first framework is the so-called “positioning” approach due to PorterPrepared by: Milan Padariya Page 13
  14. 14. Service Operation Management Assignment(Porter, 1980), which views strategy-making as an analytic process performed at theindustry-market structural level. The second framework (not included in these notes),due to Burgelman (Burgelman 2002), based on evolutionary organization theory, viewsstrategy-making as an evolutionary process performed at three levels: industry-companylevel, company-level, and intra-company level. When these two frameworks arecombined, an integrated approach to competitive strategy emerges: from industry-marketlevel all the way to intra-company level. A unique aspect of creating competitive strategyfor a technology company, and in particular, a high-technology company, is that the time-scales for the evolution of markets, industries, and technologies are, in general, muchshorter (“faster”) compared to other industries. Therefore, the strategy frameworks of thepositioning school needs to be augmented with functional maps (Clark and Wheelwright,1993), which capture the evolution of the market, industry, and technology relevant to thecompany, and which can therefore be used to create strategy.The objective of technology strategy (Clark and Wheelwright, 1993) is to guide thetechnology company in developing, acquiring, and applying technology for competitiveadvantage. An important part of technology strategy is the definition of technicalcapabilities (e.g., advanced device design, rapid prototyping, automated assembly) thatprovide competitive advantage.The objective of product/market strategy is to clearly establish the following: define whatdifferentiates the product from its competitors; identify market segments for the product,the customer needs of these segments, and the corresponding products (i.e., product lines)that will be offered to these segments; etc. An important outcome of product/marketstrategy is to define the product roadmap, including sales volume and price, necessary torealize the business goals.Competitive Strategy, the focus of this chapter, is the high-level strategy used by the firmto realize its business goals, in particular, profitability, in the face of competition.Competitive strategy conventionally refers to how the firm competes at the industry-market level (Porter, 1980). However, in the rapidly evolving industry and marketPrepared by: Milan Padariya Page 14
  15. 15. Service Operation Management Assignmentlandscape of high-technology, competitive strategy, in turn, depends on three levels of“strategy-making” as follows (Burgelman, 2002): 1. Industry-company level. At this level the firm must determine its strategic position, its core competencies, and its strategic action. 2. Company level: At this level strategy-making involves induced strategy and autonomous strategy. 3. Intra-company level: At this the internal level autonomous strategy is created.The basic premise of Porter and Hall was that for a firm to be successful (in a market) ithad to compete based on one of two sources of competitive advantage: cost, i.e., byproviding low cost products, or differentiation, i.e., by differentiating its products from itscompetitors with respect to quality and performance. Porter also proposed that a firmneeds to select its strategic target: either offering a product to the entire market (“market-wide”), or offering a product for a particular market segment. Using these twodimensions (source of competitive advantage, and strategic target), Porter proposed thefollowing three generic competitive strategies:Cost Leadership: offering the lowest costs products to the entire marketDifferentiated: offering highly unique products (as perceived by the customer) to theentire marketFocus: offering products which serve the needs of a niche segment of the marketPorter’s claim is that for a company to be successful in the industry in which it operates itmust choose between one of the three generic strategies: cost leadership, differentiated,and focus. If one uses the personal computer industry in the US during the 1990’s as anexample, then the competitive strategies of the major players was as follows: Dell wasthe low-cost leader; HP had a differentiated strategy with high-quality products; Applehad a focus strategy, targeting a narrow market segment of users who whom the user-experience (look, feel, and graphical user interfaces) were extremely important; and IBMhad a mixed strategy.Prepared by: Milan Padariya Page 15
  16. 16. Service Operation Management AssignmentQ. 5: Explain the various service encounter triad with respect to anyservice organization.Ans: The three "players" in the service triad at High Steel Service Center where I work,are fairly easily defined. I will try to describe as much as possible as to how we do thingat work with out giving out to much information to get me fired.Service Organization:To control service delivery, managers tend to impose rules and procedures on the contactpersonnel to limit their autonomy and discretion while serving the customer. Working inthe sales and marketing department I feel I have pretty free reign over what I do at work.My boss has faith in everyone in our department to make the right decisions when talkingto customers and pricing materials. However we dont have free reign to do whatever wewould like, especially now that the market has taken a turn for the worse and what wasntclosely watched before is now more regulated.Contact Personnel:Thats me! The same rules and procedures are also intended to limit the extent of serviceprovided for the customer and the resulting lack of customization that might result in adissatisfied customer. One thing that is nice about what we do at are work is that there isvery little customization. Basically we can or cant do it. We have limitation on what ourmachines are able to cut, delivery/production schedules, and what the mills are able tosell. This helps avoid upset customers because they know if we say we cant do it, wecant do it and we can recommend same one who is able to do it. Most of the time not acompetitor.Customer:Finally, the interaction between contact personnel and the customer has the element ofperceived control by both parties. The contact people want to control the behavior of thecustomer and make their own work more manageable and less stressful; at the same time,the customer is attempting to gain control of the service encounter to derive the mostPrepared by: Milan Padariya Page 16
  17. 17. Service Operation Management Assignmentbenefit from it. At our work the customer has a lot of control over what they want ... if wehave it, but like I mentioned before if we dont have it, then we cant do it. Customers cancontrol the shape, sizes, and delivery date of their shipments (for the most part) but cantalways control their pricing. This is always market driven.Most services are characterized by an encounter between a service provider and acustomer. Recall from Chapter 5, the Service Delivery System, that this encounter occursabove the "line of visibility" on the service blueprint. This interaction, which defines thequality of the service in the mind of the customer, has been called a "moment of truth" byRichard Normann.1 The often brief encounter is a moment in time when the customer isevaluating the service and forming an opinion of its quality, A customer experiencesmany encounters with a variety of service providers, and each moment of truth is anopportunity to influence the customers perceptions of the service quality. For example,an airline passenger experiences a series of encounters, beginning with purchasing theticket from a telephone reservation clerk and continuing with baggage check-in at theairport, in-flight service, baggage claim on arrival, and finally, the award of frequent flyercredit.Realizing that such moments of truth are critical in achieving a reputation for superiorquality, Jan Carlzon, the CEO of Scandinavian Airlines System (SAS), focused on theseencounters in the reorganization of SAS to create a distinctive and competitive position interms of quality of service. According to Jan Carlzons philosophy, the organizationexists to serve the front-line workers who have direct customer contact. His revolutionarythinking stood the old organization chart on its head, placing the customer-encounterpersonnel (formerly at the bottom) now at the top of the chart. It then became everyoneelses responsibility to serve those front-line personnel who in turn served the customer.Changing the organization chart signaled a move to refocus on satisfying the customerand managing moments of truth. It is interesting that this implementation requireddividing the company into various profit centers down to the route level and allowingmanagers (now close to the customers) the authority to make decisions on their own.2In this answer the service encounter is depicted as a triangle formed by the interactinginterests of the customer, service organization, and contact personnel. Each participant inPrepared by: Milan Padariya Page 17
  18. 18. Service Operation Management Assignmentthe service encounter attempts to exert control over the transaction, leading to the needfor flexibility and the empowerment of contact personnel. A discussion of serviceorganization culture follows, with examples of how the founders of successful servicefirms established a set of values and expectations encouraging their employees to focuson delivering exceptional service.The activities of selecting and training contact personnel are addressed next. Then, themany expectations and attitudes of customers are explored, as well as the concept of thecustomer as coproducer. The high correlation of service quality perceptions that areshared by contact personnel and customers leads to a discussion of managementscontribution to creating a customer service orientation among its employees. A chaptersupplement addresses the topic of work measurement.1 Richard Normann, Service Management, John Wiley & Sons, New York, 1984, p. 89.:Jan Carlzon, Moments of Truth, Ballinger, Cambridge, Mass., 1987.THE SERVICE ENCOUNTER TRIADOne of the unique characteristics of services is the active participation of the customer inthe service production process. Every moment of truth involves an interaction between acustomer and a service provider; each has a role to play in an environment staged by theservice organization. The service encounter triad shown in Figure 9.1 captures therelationships between the three parties in the service encounter and suggests possiblesources of conflict.The managers of a for-profit service organization have an interest in delivering service asefficiently as possible to protect their margins and remain competitive. Nonprofit serviceorganizations might substitute effectiveness for efficiency, but they still must operateunder the limits imposed by a budget. To control service delivery, managers tend toimpose rules and procedures on the contact personnel to limit their autonomy anddiscretion when serving the customer. These same rules and procedures also are intendedto limit the extent of service provided for the customer and the resulting lack ofcustomization that might result in a dissatisfied customer. Finally, the interaction betweencontact personnel and the customer has the element of perceived control by both parties.Prepared by: Milan Padariya Page 18
  19. 19. Service Operation Management AssignmentThe contact people want to control the behavior of the customer to make their own workmore manageable and less stressful; at the same time, the customer is attempting to gaincontrol of the service encounter to derive the most benefit from it.Ideally, the three parties gain much by working together to create a beneficial serviceencounter. The moment of truth can be dysfunctional, however, when one partydominates the interaction by focusing solely on his or her own control of the encounter.The following examples illustrate the conflict that arises when each party in turndominates control of the encounter.Encounter Dominated by the Service OrganizationTo be efficient and, perhaps, to follow a cost leadership strategy, an organization maystandardize service delivery by imposing strict operating procedures and,thus, severely limiting the discretion of the contact personnel. Customers are presentedwith a few standard service options from which to choose, and personalized service is notavailable. Many franchise services such as McDonalds, Jiffy Lube, and H. & R. Blockhave been successful with a structural organization and environment that dominates theservice encounter. Much of their success has resulted from teaching customers what notto expect from their service; however, much of the frustration that customers experiencewith other institutions, labeled pejoratively as "bureaucracies," is the result of contactPrepared by: Milan Padariya Page 19
  20. 20. Service Operation Management Assignmentpersonnel having no autonomy to deal with individual customers needs. Contactpersonnel in such organizations may sympathize with the customer but are forced to go"by the book," and their job satisfaction is diminished in the process.Contact Personnel-Dominated EncounterIn general, service personnel attempt to limit the scope of the service encounter to reducetheir own stress in meeting demanding customers. When contact personnel are placed inan autonomous position, they may perceive themselves as having a significant degree ofcontrol over customers. The customer is expected to place considerable trust in thecontact persons judgment because of the service providers perceived expertise. Therelationship between physician and patient best illustrates the shortcomings of the contactpersonnel-dominated encounter. The patient, who is not even referred to as a "customer,"is placed in a subordinate position with no control over the encounter. Further, an alliedorganization, such as a hospital in this case, is subjected to tremendous demands placedon it by individual staff physicians with no regard for matters of efficiency.Customer-Dominated EncounterThe extremes of standardized and customized services represent opportunities forcustomers to control the encounter. For standardized services, self-service is an optionthat gives customers complete control over the limited service that is provided. Forexample, at a self-service gasoline station that is equipped with a credit card reader, thecustomer need not interact with anyone. The result can be very efficient and satisfying tothe customer who needs or desires very little service. For a customized service such aslegal defense in a criminal case, however, all the organizations resources may be needed,at great cost in efficiency.A satisfactory and effective service encounter should balance the need for control by allthree participants. The organizations need for efficiency to remain economically viablecan be satisfied when contact personnel are trained properly and the customersexpectations and role in the delivery process are communicated effectively. Ourdiscussion of approaches to managing the service encounter begins with the serviceorganization.Prepared by: Milan Padariya Page 20
  21. 21. Service Operation Management AssignmentTHE SERVICE ORGANIZATIONThe service organization establishes the environment for the service encounter. Theinteraction between customer and contact personnel occurs within the context of anorganizations culture as well as its physical surroundings.CultureWhy do you choose one service over another-Supermarket A over supermarket B,copying service X over copying service Y, or family practitioner M over familypractitioner D? Cost, you may answer ... or ambiance or any of several other goodreasons. The bottom line, however, may be corporate culture, because the underlyingculture helps to determine the value that customers place on the service. Severaldefinitions of organizational culture have been proposed:• Culture is a pattern of beliefs and expectations that is shared by the organizationsmembers and produces norms that powerfully shape the behavior of individuals or groupsin organizations.3• Culture is the traditions and beliefs of an organization that distinguish it from otherorganizations and infuse a certain life into the skeleton of structure.4• Organizational culture is a system of shared orientations that hold the unit together andgive a distinctive identity.5The founders and/or senior managers of a service organization establish, whetherpurposely or unintentionally, a climate or culture that prescribes a norm of behavior or setof values to guide employee decision making in the firm. Take, for example,ServiceMaster, a very profitable company that provides hospitals and other organizationswith housekeeping services. Writing about ServiceMaster, Carol Loomis discovered thatthe companys name embodied its value of "Service to the Master."Founded by a devout Baptist, the late Marion E. Wade, the company has alwaysdescribed itself as driven by religious principle. The first of its corporate objectives is "tohonor God in all we do." The cafeteria wall at ServiceMasters suburban headquartersPrepared by: Milan Padariya Page 21
  22. 22. Service Operation Management Assignmentproclaims that "Joy cometh in the morning," and although there are no "Cleanliness isnext to Godliness" signs around, the neatness and shine of the office project the thought.6Choice of language is another approach to communicate values, as illustrated by the WaltDisney Corporation. At Disney theme parks, show business terms are used because theyare in the entertainment business. Instead of Personnel there is Casting. Employees arereferred to as "cast members" to instill the appropriate frame of mind. Cast memberswork either "onstage" or "backstage," but both kinds of employees are required to "put onthe show."The examples above illustrate how an organizations values, when consistentlycommunicated by management, permit contact personnel to act with considerableautonomy, because their judgment is founded on a shared set of values. These valuesoften are communicated by stories and legends about individual risk-taking on behalf ofthe organization and its customers. Federal Express, with a motto of "absolutelypositively overnight," has many stories of extraordinary employee feats to safeguard thatexample, the pick-up driver who was faced with a collection box he was unable to open-instead of leaving it standing on the street comer until someone could come out to repairit, he wrestled the entire box into his vehicle so that the packages it contained could beliberated and delivered the next day.The organization benefits from a shared set of values, because contact personnel areempowered to make decisions without the need for the traditional level of supervision,which assumes that only management is vested with authority to act on behalf of theorganization.EmpowermentFor years, McDonalds has served as the model of efficient service delivery. In-corporating the traditional mass-production philosophy of industry, McDonalds has beensuccessful in delivering a consistent meal to billions of customers through anorganization that could be described as "manufacturing in the field." The discretion ofcontact personnel is limited by procedures and design (e.g., the trench fry scoop thatPrepared by: Milan Padariya Page 22
  23. 23. Service Operation Management Assignmentguarantees portion control). Most employees are minimum-wage teenagers, and highturnover is the norm. The organizations structure is pyramid-shaped, with layers ofsupervision from the assistant store manager, store manager, and regional manager tocorporate "consultants," to ensure consistency of service delivery across all locations.A new model of service organization now is emerging that has a structure best describedas an inverted T. In this organization, the layers of supervision are drastically reduced,because contact personnel are trained, motivated, and supplied with timely, computer-based information that enables them to manage the service encounter at the point ofdelivery.Jan Carlzon, the innovative president of SAS, is quoted as saying:Instructions only succeed in providing employees with knowledge of their ownlimitations. Information, on the other hand, provides them with a knowledge of theiropportunities and possibilities ... To free someone from rigorous control by instructions,policies and orders, and to give that person freedom to take responsibility for his ideas,decisions and actions, is to release hidden resources which would otherwise remaininaccessible to both the individual and the company ... A person who has informationcannot avoid taking responsibility-7Perhaps it is surprising that Taco Bell has become the new service model of employeeempowerment. Other firms adopting this new model include ServiceMaster, Marriott, andDayton Hudson. Senior managers of these firms all share a belief that people want to dogood work-and will do so if given the opportunity. Consequently, they have made thefollowing commitments: 1) to invest in people as much as, or more than, in machines; 2)to use technology to support contact personnel rather than to monitor or replace them; 3)to consider the recruitment and training of contact personnel as critical to the firmssuccess; and 4) to link compensation to performance for employees at all levels. In thistype of organization, a much-reduced middle management no longer has the traditionalsupervisory role; instead, middle managers become facilitators for the front-line orcontact personnel. More important, investment in computer infor-Prepared by: Milan Padariya Page 23
  24. 24. Service Operation Management Assignment7 W. E. Sasser, jr., C. W. L. Hart, and ]. L. Heskett, The Service Management Course, TheFree Press, New York, 1991, p. 97.mation systems is necessary to supply the front-line personnel with the ability to resolveproblems as they arise and to ensure a quality service encounter.8Empowered contact personnel must be motivated, informed/ competent, committed, andwell-trained. Front-line personnel should exhibit the ability to take responsibility, managethemselves, and respond to pressure from customers.CONTACT PERSONNELIdeally, customer contact personnel should have personality attributes that includeflexibility, tolerance for ambiguity, an ability to monitor and change behavior on thebasis of situational cues, and empathy for customers. The last attribute (i.e., empathy forcustomers) has been found to be more important than age, education, sales-relatedknowledge, sales training, and intelligence.Some individuals may find front-line service to be boring and repetitive, whereas otherssee the job as providing an opportunity to meet and interact with a variety of people.Those with the necessary interpersonal skills may gravitate toward high-contact servicejobs, but a selection process still is required to ensure high-quality moments of truth.SelectionNo reliable tests exist to measure a persons service orientation; however, a variety ofinterviewing techniques have proven to be useful. Abstract questioning, the situationalvignette, and role playing all have been used in evaluating potential front-line employees.Abstract QuestioningThe questions asked in the abstract interview are open-ended. They provide insightsregarding an applicants ability to relate the immediate service situation to informationcollected from past experience. An example of a question that assesses an applicantsattention to the environment would be "From your past work experience, what type ofcustomer was most difficult for you to deal with and why?" To determine if an applicantPrepared by: Milan Padariya Page 24
  25. 25. Service Operation Management Assignmentactively collects information, a questioner might ask, "What was the customers primarycomplaint or negative characteristic?" Some final questions to evaluate the applicantsinterpersonal style could be "How did you handle the customer?" and "What would be theideal way to deal with that type of customer?"Abstract questioning also can be used to reveal a persons willingness to adapt. Aneffective employee will take notice of details in his or her personal life as well as on thejob. People who consider the events around them and can describe their significanceusually are able to learn more as well as faster.Because of their nature and preparation for the interview, some applicants will be betterable than others to talk extensively about their past experiences. Careful listening andprobing by the interviewer for the substance of an answer to an abstract question willlessen the possibility of being deceived with8 L. A. Schlesinger and J. L. Heskett, "The Service-Driven Service Company," HarvardBusiness Review, September-October 1991, p. 72."puffery." Finally, there is no assurance that the ability to reflect on past eventsnecessarily will guarantee that such perceptiveness and flexibility will transfer to the job.Situational VignetteA situational vignette interview requires the applicant to answer questions regarding aspecific situation. For example, consider the following situational vignette:The day after a catering service has catered a large party, a customer returns some smallcakes, claiming they were stale. Although the man is demanding a refund, he is so soft-spoken and timid that you can hardly hear him across the counter. You know that yourbusiness did not make those cakes, because they dont look like your chefs work. Whatwould you do?Presenting a situation like this may reveal information regarding an applicants instincts,interpersonal capabilities, common sense, and judgment. To gain more information abouta candidates adaptability, further questions about the situation can be asked: "How wouldPrepared by: Milan Padariya Page 25
  26. 26. Service Operation Management Assignmentyou handle the man if, suddenly, he were to become irate and insistent? What stepswould you take to remedy the situation?"Situational vignettes provide an opportunity to determine whether applicants are able to"think on their feet." An applicant with good communication skills, however, still maynot indicate clearly a genuine desire to serve customers or an empathic nature. Again, theinterviewer must pay close attention to the substance of an applicants response inaddition to the way it is delivered.Role PlayingRole playing is an interviewing technique that requires applicants to participate in asimulated situation and to react as if this service environment were real. Role playingoften is used in the final phase of recruitment, and others in the organization are asked tocooperate by posing as "actors" for the situation.Role playing provides a way for an interviewer to observe an applicant under stress.Interviewers using this technique may probe and change the situation as the sessionprogresses. This method allows for more realistic responses than either the abstractquestioning or situational vignette interviews; applicants are required to use their ownwords and react to the immediate situation instead of describing them.Although role playing provides an excellent opportunity to observe a candidatesstrengths and weaknesses in a realistic customer encounter, direct comparison ofapplicants is difficult. Role playing does require careful scripting, and the "actors" needto rehearse their roles before the interview.TrainingMost training manuals and employee handbooks for customer-contact personnel aredevoted to explaining the technical skills that are needed to perform the jobs. Forexample, they often detail explicitly how to fill out guest reports, use cash registers, dressproperly, and enforce safety requirements, but customer interaction skills are dismissedwith a simple comment to be pleasant and smile.Prepared by: Milan Padariya Page 26
  27. 27. Service Operation Management AssignmentPrepared by: Milan Padariya Page 27

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